Low dairy payouts 'like going through a meat grinder'

Fonterra's board and top management faced a tetchy reception at yesterday's annual meeting in Waitoa from shareholders looking at the prospect of two straight years of low milk prices.

The most animated discussion came around the remit aimed at cutting the size of the board from 13 to nine.

At the four-hour long meeting, one shareholder from Taranaki said he was concerned that suppliers were leaving the co-operative as "as fast as alternative companies can build the stainless steel".

"We certainly need a change of culture," he said.

Fonterra last week said it was increasing its forecast earnings per share range for the current financial year to 45-55c. With a forecast farmgate milk price of $4.60, this lifts the total available for payout to $5.05-$5.15 per kg of milksolids, and would currently equate to a total forecast cash payout of $4.95-$5 per kg of milksolids after retentions.

Another shareholder complained about Fonterra's payout for 2014/5 being lower than the second biggest co-op, Westland Milk.

"When Westland beats us on the payout, then I get really concerned," he said.

Chairman John Wilson has been returned to the board while Blue Read lost his seat to Ashley Waugh. Shareholders also re-elected Nicola Shadbolt. The ballot attracted a record turnout, with shareholders representing 65 per cent of farms, or 73 per cent of milk solids, casting their votes.

The board and management also drew flak for suddenly announcing restrictions on the use of palm kernel, which many farmers have come to use as an important standby, particularly when feed is short.

One said the prospect of two low payout years together was "like going through a meat grinder".